Bribery in international business

Proceeds from bribery can - and must- be accurately calculated in order to impose appropriate penalties, finds a joint OECD/StAR Study

28/11/2011 - Law enforcement must be able to impose appropriate penalties when companies bribe officials to win contracts or gain undue advantages. But calculating and confiscating the proceeds of this crime is difficult. To help governments meet this challenge, the OECD and the World Bank/UNODC Stolen Asset Recovery Initiative (StAR) released today a new study on the Identification and Quantification of the Proceeds of Bribery.

“Countries’ ability to seize and confiscate the gains from bribery is integral to the international fight against bribery and corruption, ” said Mark Pieth, Chair of the OECD Working Group on Bribery, made up of representatives from the Parties to the Anti-Bribery Convention. “It’s a requirement of all countries that join the OECD Anti-Bribery Convention and the UN Convention against Corruption.”

When a company pays a bribe to win a contract, the proceeds can only be confiscated if they are calculated accurately. So far, a small but growing number of courts have managed to apply methods to confiscate or recover the proceeds that companies and individuals have obtained by bribing officials.

The Identification and Quantification of the Proceeds of Bribery examines existing methods for calculating the gains made by companies that pay bribes. Drawing from cases in Indonesia, South Africa, the United States and others, it shows the most accurate methods for calculating gross and net profits, as well as what can be recovered within a particular legal regime.

“This report is important because it is the first one that categorizes the main methods used in calculating ill-gotten gains across different legal systems,” stressed Jean Pesme, StAR Coordinator. “In many countries, the idea of penalizing bribery is perceived as too complicated to be seriously pursued. This book lays out in practical terms, and for all potential scenarios, well established practices that can be followed by practitioners”. This report builds on these experiences to provide real-life examples to show how the proceeds of bribery can be calculated and recovered by governments.

About StARThe Stolen Asset Recovery Initiative (StAR) is a partnership between the World Bank Group and the United Nations Office on Drugs and Crime that supports international efforts to end safe havens for corrupt funds. StAR works with developing countries and financial centers to prevent the laundering of the proceeds of corruption and to facilitate more systematic and timely return of stolen assets.

About the World Bank GroupThe World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit www.worldbank.org, www.miga.org, and www.ifc.org.

About the OECD Anti-Bribery ConventionThe OECD groups 34 member countries committed to democracy and the market economy. It provides a forum in which governments can compare and exchange policy experiences, identify good practices and promote decisions and recommendations. The Organisation’s mission is essentially to work for a stronger, cleaner, fairer world economy.

The OECD is also home to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the first and only international instrument designed to tackle the supply side of bribery. The OECD Working Group on Bribery in International Business Transactions monitors the implementation of the OECD Anti-Bribery Convention by State Parties through a rigorous system of peer review. More information about the Anti-Bribery Convention is available online at:www.oecd.org/daf/nocorruption/convention.